Consolidation of tax periods in show-cause notices ruled impermissible, State High Court precedent binds and separate notices may be reissued.

Consolidation of multiple financial years or tax periods into a single show-cause notice was held impermissible, the legal basis being appellate precedents of the State High Court which the authorities below must follow; consequence: consolidated SCNs cannot stand. The concept of merger of judgments was rejected because a higher court dismissed a challenge in limine rather than on merits, so that dismissal does not negate the State High Court rulings; consequence: those State High Court decisions continue to bind. Parties are permitted to reissue separate notices strictly in accordance with statutory procedure if no other legal impediment exists; consequence: reviving the petition is allowed if those State High Court judgments are later set aside.

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Issues: (i) Whether a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017 can validly consolidate and cover multiple financial years/tax periods in a single notice.

Analysis: The Court examined the statutory scheme governing assessment and recovery under the CGST Act, including the concept of a defined tax period based on returns (monthly or annual), the separate five-year limitation period for each financial year provided by Sections 73(10) and 74(10), and the statutory treatment of annual returns as fixing liability for a specific financial year. The Court considered prior Division Bench decisions which held that aggregating multiple financial years in a single SCN collapses distinct tax periods that have different due dates and limitation runs, thereby undermining the year-wise structure of the statute and the taxpayer's ability to respond year by year. The Court distinguished contrary authority by noting that the contrary view did not consider these statutory niceties and that a summary dismissal by the Supreme Court of a challenge to that contrary view did not amount to a decision on merits that would bind this Court.

Conclusion: The Court concluded that issuance of a consolidated show cause notice under Section 74 covering multiple financial years/tax periods is not permissible; accordingly, the impugned order and consolidated notices were quashed and set aside, with liberty to reissue notices strictly in terms of Section 74 if not barred by any other law.

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